Havelock sees shares surge after clearing debts

GARETH MACKIE

SHARES in Fife shopfitting and interiors firm Havelock Europa jumped yesterday after it told investors it was free of debts in the wake of a “challenging” year.

The company, which is in the process of moving its headquarters from Dalgety Bay to Kirkcaldy, also predicted a rebound in activity across the education sector and set a target to grow its international sales.

However, a reduction in work for financial services clients saw turnover fall to £83.4 million in the 12 months to 31 December, down from £89.6m a year earlier. As a result, pre-tax profits before one-off items slumped to £180,000, compared with £632,000 last time.

Havelock chairman David MacLellan said: “2014 was a challenging period for the business, largely as a result of the lower than expected activity in the education sector, coupled with the downturn in financial services. However, progress continued to be made in debt reduction and in developing a broader mix of business, in line with the strategy set by the board.”

MacLellan added that it was “particularly pleasing” to report that the business was “effectively debt free” at the end of December, having owed £19.4m to the bank five years earlier.

Havelock’s shares ended the day up 1.25p at 15.25p – an increase of 9 per cent.

In March, the group announced that chief executive Eric Prescott – who had earlier said he was planning to step down from the business this year – had left with immediate effect, and the firm yesterday told shareholders that the search for his successor was ongoing.

Following Prescott’s departure, group commercial director David Ritchie was appointed to the new role of chief operating officer at the Aim-quoted company, which has about 550 staff, including more than 400 in Fife.

Ritchie said Havelock exceeded its target of generating 10 per cent of group revenues from international sales last year and has set itself a new goal of growing that share to 15 per cent.

He added: “One of the key overseas markets for us is Australia. We picked up a framework agreement with one of the key retailers there, and we’re making good progress. We also have a facility in Shanghai, which is yielding positive news in relation to the international market.”

Recent projects overseas include the fit-out of Marks & Spencer stores in Hong Kong, while closer to home the group worked on an Edinburgh branch for high street bank Halifax.

“Within retail we had a strong 2014, but the sector remains very competitive and we are concentrating on winning new customers to increase our resilience,” Havelock said. “A similar strategy is being developed in financial services as we see this sector becoming more challenging over the next few years.”

But the company predicted the upturn in education activity forecast for this year and next is expected to “more than offset the ongoing weakness in the financial services sector”.

MacLellan said Havelock was working hard to make sure this improvement was sustainable longer term, but the firm needed to reduce its reliance on trading in the second half of the year, which accounts for more than 60 per cent of sales.